On the heels of the recent turbulent trading in global markets, one of the greats today said you can kiss it goodbye.
Kiss It Goodbye
May 8 (King World News) – Here is a small portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness: It’s been talked about here and everywhere this year. What’s the message the stock market is sending in rocketing to record highs, outside of loving the Powell put kicking in. What’s the bond market saying with the sharp decline in bond yields, outside of responding to the Powell shift. I tried to reconcile by saying stocks are betting on a rebound in the global economy (with 40% of S&P 500 revenue sourced from overseas) in coming quarters while Treasury yields were focused on the current slowdown and being suspect of that recovery. I’ll say this that if we get higher tariffs this week and talks break down between the US and China, you can kiss that hoped for global economic rebound goodbye…
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I’ve also said the behavior in semiconductor stocks, hitting an all time record high two weeks ago, and the 10 yr US Treasury yield down by 75 bps as of two weeks ago from the October level was a perfect encapsulation of the above differences of opinion. The former betting on a 2nd half recovery, the latter dealing with the here and now (see chart below).
Semiconductor Stocks Recently Hit All-Time Highs While 10-Year Treasury Yields Have Plunged
Well at least for the here and now, bonds have had it right. Yesterday IHS Markit revised its 2019 growth estimate for the global semiconductor market to a drop of 7.4% y/o/y in revenue. They said:
“After the chip industry attained a heady revenue expansion of 15% in 2018, many semiconductor suppliers in early 2019 remained optimistic that they could achieve modest growth this year. However, the chipmakers’ confidence quickly transformed into apprehension as they witnessed the depth and ferocity of the current downturn. The latest data indicates the semiconductor business now is destined for its worst year in a decade.” The underline is mine.
Their reason:
“The precipitous nature of the downturn is due to increasingly soft demand, combined with a rapid rise in inventory levels in the first quarter.”
As semi’s go into so many different end markets, like smartphones, PC’s, auto’s, industrial markets, and data center’s to name a bunch, it is a tell.
So again, say goodbye to that hoped for 2nd half recovery if we can a ramp up in trade tensions with China. I’m all for getting China to change their ways and protecting US interests but the tool of tariffs in order to achieve it has its consequences.
For those who missed it…
On A Roll
Bryan Slusarchuk, co-founder: “We just reported all-in sustaining costs of (US) $545 an ounce, which places K92 as one of the world’s lowest cost producers. I believe this performance is top 10 worldwide (all mines) and top 4 worldwide (underground). To achieve this type of performance (US $395/Au cash costs and $545/AuEq AISC) this early in the mine’s development and ramp up is truly amazing and a huge credit to the onsite team.
With multiple drill rigs turning coupled with the news earlier this we reported earlier this week that described multiple wide zones of high grade gold from drilling at Kora and a big exploration success regarding a vertical extension, investors should expect a lot of news flow as K92 continues to progress onsite.
K92, while at a small market capitalization right now, has that rare combination of very high grades and huge size potential. And, unlike most small companies in the space, K92 has excellent cash flow and the opportunity to self-fund exploration and expansion, which means continued massive growth in production, earnings and cash flow with no dilution for shareholders.”
John Lewins, K92 Chief Executive Officer and Director, states within today’s News Release:
“The first quarter of 2019 was a record for K92 in multiple aspects, just under 20,000 ozs AuEq produced, Cash Costs below US$400/oz AuEq, AISC below US$550/oz AuEq and revenue of almost US$24 million.”
K92, symbol KNT in Canada and KNTNF in the US.
A good ranking (just out in the past week) from Mining Intelligence as to the world’s lowest cost mines; CLICK HERE.
To read today’s exciting news release CLICK HERE
***KWN has now released the powerful audio interview with Adrian Day and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released: Art Cashin – Jeff Gundlach And The Real Reason For The Shift In Markets CLICK HERE TO READ.
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